SATYENDRA KUMAR Vs. HIND CONSTRUCTIONS LTD

JUDGEMENT

(1.) THIS appeal arises out of a petition filed by the appellant to set aside an award. Shah J. dismissed that petition and it is from that order of dismissal that this appeal is preferred. The appellant and the petitioner entered into an agreement with the respondent company, the Hind Constructions. Ltd., by which he agreed to act as a sub-contract or in respect of a contrast which the respondents had taken. That agreement was entered into on 5th January 1948. In respect of the payment to be made under the agreement there were disputes between the petitioner and the respondent company and the disputes were referred to the arbitration of Dr. Pandya on 3th January 1949. Dr. Pandya waa the general manager and an ex-officio director of the Hind Constructions Ltd. Dr. Pandya directed that an interim payment of Rs. 40,000 should be made to the petitioner of 11th January 1949, and on 13th January 1949, he made his award. By this award he directed a further sum of Rs. 10,000 to be paid to the petitioner The present petition to set aside the award was filed on 23rd April 1949. The award was challenged on various grounds, but only two grounds and substantially one ground his been pressed before this Court. The ground is that the petitioner was not aware at the time he went to the arbitration of Dr. Pandya that he was a director of the Hind Constructions Ltd. and it is also urged that Dr. Pandya was disqualified from acting as an arbitrator by the interest that he had, the interest beings that he was a director of the Hind Constructions, Ltd., and by the fact of the arbitrator having this interest not being disclosed to the petitioner.

(2.) THE contention of the respondent company was that the petitioner was aware of the fact that Dr. Pandya was a director of the Hind Constructions, Ltd., and the learned Judge below has held on a review of the evidence that the fact of Dr. Pandya being a director was disclosed to the petitioner. Bat another and perhaps a more important point arises in this appeal, and that is whether there was any obligation upon Dr. Pandya to disclose the fact that he was a director of the Hind Constructions, Ltd. It will be perhaps better if we approached the second question first, because if there was no obligation upon Dr. Pandya to Satyendra Kumar vs. Hind Constructions Ltd. (14.08.1951 - BOMHC) Page 2 of 5 disclose that fact, then the decision on the question of fact really becomes unnecessary.

(3.) NOW, in order to decide this question, we must try and lay down clear principles which should apply to the conduct of arbitrators. There can be no doubt that an arbitrator must show uberrima fides to the parties whose disputes he is going to arbitrate and who have constituted him their domestic forum. In a sense the position of an arbitrator is different from that of a Judge. If a party goes to a Court, he has got to submit to a decision of the Judge. He has no choice in the appointment of the Judge. But when parties go to a domestic forum and want their matters to be determined by arbitration; they have every choice as to the person whom they should select as their arbitrator, and therefore it is clear that highest faith should be shown by the arbitrator. It also follows that the arbitrator must disclose to the parties all facts which are likely or calculated to bias him in any way in favour of one or the other party. A circumstance or a fact may in fact not bias the decision of the arbitrator. The arbitrator may have too strong a character, too deep a sense of justice to be influenced by any consideration extraneous to or foreign to the evidence which he has got to consider. But the Question is not what is likely in fact to happen, but what is likely to tend or is calculated to tend to a particular result. Therefore, if the Court comes to the conclusion that there are any facts or any circumstances which are likely to affect the decision of the arbitrator which are likely to bias him, it would be incumbent upon the arbitrator to disclose those facts to the parties If he fails to disclose these facts, then his award would be liable to be successfully challenged.